Coal: The Ignored Juggernaut

Oil, natural gas, and alternatives dominate the headlines when it comes to energy. But there's a big and largely-overlooked revolution occurring with the energy source likely to become the most preferred fuel for a world in economic decline: coal.

The United States coal sector has been hit very, very hard this spring. Demand has been crushed by over 10%, as warm weather and bountiful supplies of cheap natural gas have induced power plant operators and all other users where possible to switch away from domestic coal. The rapid change in fortune has sent the stock prices of big, listed names such as Peabody and Arch down by double digit percentages, as the Dow Jones US Coal Index has fallen below 160 from above 225 at the start of 2012.

From Bloomberg:

Central Appalachian thermal coal futures, the U.S. benchmark, averaged $60.20 during the first quarter, down from an average of $73.58 in the year ago period and down from a high of $143.25 in July 2008. “It’s like a perfect storm,” Mann said. “The three main challenges are the really mild winter, a lethargic economy and on top of that, with gas prices being so low, those utilities that can burn gas have opted to burn gas instead of coal because gas is so cheap.” Cheap gas has undercut power producers’ revenues because it drives down wholesale electricity prices, squeezing margins for plants that run on nuclear, renewable and coal power. Moody’s Investors Service changed its outlook for the U.S. coal industry to “negative” from “stable” on May 7, citing weak prices and a drop in power demand, and said it expects a 5 percent decline in prices for coal deliveries in 2013. The U.S. Energy Information Administration expects the industry to see a 10.9 percent decline in coal consumption this year and Moody’s expects U.S. coal demand from power plants to plunge by 100 million tons by 2020, the ratings company said in the report.


Given the rather weak near-term and long-term outlook for US coal demand, it’s not surprising that within such a capital-intensive business, a number of smaller coal producers were hit recently with bankruptcy rumors. Indeed, even large cap names like Arch Coal have seen an escalation of concern over debt levels. Accordingly, many have concluded that coal -- in an era of solar, wind, and natural gas -- has finally displaced itself due to its problematic extraction, distant transportation, and overall costs. Is coal finally going away as an energy source?

Not a chance.

Indeed, everything currently unfolding for coal in the United States is precisely what is not unfolding for coal globally. Prices to import natural gas to most countries via LNG remain sky-high, easily protecting coal’s cost advantage. And the demand for coal in the developing world remains gargantuan. Accordingly, just as with oil, lower US demand simply frees up supply to elsewhere in the world.

The global coal juggernaut rolls onward.

Soaring US Exports

In the same way that falling US oil consumption has freed up global supply, so now is US declining coal demand freeing up production for export. Last year marked a twenty-year high in US coal exports:

For the full year of 2011, the US exported 107,259 thousand short tons of coal. This was the highest level of coal exports since 1991. More impressive: exports recorded a more than 25% leap compared to the previous year, 2010. (see data here, opens to PDF).  Additionally, this was also a dramatic breakout in volume from the previous decade, which ranged from 40,000 – 80,000 thousand short tons per annum.


The United States remains a large consumer of coal, and currently places second, behind China, in the top global users, which I call the Coal 7: China, USA, India, Japan, Russia, South Africa, and Germany. Accordingly, this means that the US, which currently consumes about 15% of total global demand, is about to become a marginal new source of global supply.

Although most grades of coal are still trading at a cheaper price level than a similar equivalent amount of BTUs sourced from natural gas, the all-in costs of burning coal in the United States given our regulatory framework is now higher than burning natural gas. In one sense, this is not a new story. Indeed, the advent of the Environmental Protection Agency in 1970 and the historic wave of pollution regulations set the United States on a course away from coal and towards natural gas over 40 years ago. Even the coal industry is eager to advertise the long decline of coal-fired pollution (as a portion of the whole) in the United States, which is due overall to an increase in emissions control, but is mostly the result of the rise of natural-gas-fired power since the early 1970s.

Global Coal Picture

What has changed, however, is that coal is the preferred energy source of the developing world.

In addition, as the Organisation for Economic Co-operation and Development (OECD) has shifted its manufacturing to the developing world over the past few decades, coal has been the cheap energy source that has powered the rise of such manufacturing, especially in Asia. Accordingly, the extraordinary increase in global coal consumption the past decade is partly due to the OECD offshoring its own industrial production. How are most consumer goods made? Using electricity in developing world manufacturing centers, generated by coal.

Only a very small portion of the global public is aware that global coal consumption has advanced by over 50% in the past decade. According to data from the just-released BP Statistical Review, from 2001 through 2011, global consumption of coal rose an astonishing 56%. Using the energy unit Mtoe (million tonnes oil equivalent), global coal consumption rose 1,343 Mtoe, from 2,381 to 3,724 Mtoe. And this trend shows no sign of slowing down.

Additionally, this advance contrasts greatly with the flattening of global oil production and thus the slowdown in global oil consumption. Oil's price revolution has killed a great deal of oil demand. But few are aware that while oil has fallen as a portion of primary world energy supply, coal has stormed to prominence. This is why the export of US coal, and world trade in coal, still has room to run.

Coal Hunger: It’s Not Just China

Coal consumption in the robust Indian economy has grown rapidly in recent years, averaging 8.5% per year in 2006-10 according to EIA data, including growth of 10.8% in 2010. Although we have slightly reduced our 2012-13 growth forecasts for India in light of global developments, the economy is still expected to grow by around 8% per year. Coal consumption is therefore expected to continue to rise strongly, boosted by the long-term plan to increase thermal power-generation capacity in an effort to increase access to electricity in rural areas. In its new five-year plan for the period 2012-17 the Indian government envisages that the rate of annual demand growth could stay at around 8%.

(Source: World Coal: The IEU’s Monthly Outlook, via The Economist Intelligence Unit)

2008 saw the crossing of a major milestone in humanity’s march towards industrialism, when, for the first time ever, more than 50% of the world’s population became urban.

This great migration from the countryside to the cities, which is happening in Africa, Asia, and the Middle East, is a primary driver for coal demand, as millions of new city dwellers take their place in the power grid. This recent table of projected urban population growth rates from the Economist, in its piece on Emerging Market Cities, demonstrates that an enormous phase of change still lies ahead:


The world continues to marvel at the growth rates seen in Chinese cities, like Shanghai, which is expected to add over 200,000 new residents per year in the 15-year period from 2010 to 2025. Such a pace will grow the Shanghai population from its 2010 level of 16.6 million residents to at least 19.6 million residents. However, the growth rates of urbanization are even faster in emerging mega-cities such as Kinshasa, Lagos, Karachi, Dhaka, Mumbai, and of course, Delhi. As Mike Davis writes in his terrific book, Planet of Slums:

Ninety-five percent of this final buildout of humanity will occur in the urban areas of developing countries, whose populations will double to nearly 4 billion over the next generation…The scale and the velocity of Third World urbanization, moreover, utterly dwarfs that of Victorian Europe. London in 1910 was seven times larger than it had been in 1800, but Dhaka, Kinshasa, and Lagos today are each approximately forty times larger than they were in 1950.


Despite the fact that the developing world has indeed increased its demand for oil, thus taking nearly 100% of the supply freed up by weak OECD economies, the economies of the developing world are largely running not on liquid BTUs, but rather on BTUs from coal.

Coal’s versatility, in that it can be stored cheaply and transported via ship, rail, truck, or in smaller quantities by small personal transport, makes it the logical energy choice for the developing world. (This is not to say that wind and solar do not also make sense in non-OECD nations. Indeed, the fast pace of growth in renewables in the developing world is astonishing as well). Most important is that the cheap price of coal, especially when burned without environmental regulations, aligns with developing world wages.

For those concerned with climate change, this is, of course, terrible news. However, many of the world’s international organizations, from the International Energy Agency in Paris to various OECD policy-making groups, remain very focused on making sure that developing world nations get access to electricity. There is a strong view and strong agreement among Western policy makers that working to ensure that the world’s poor have access to electricity is the most transformative action to pull humanity out of poverty. Surely this is why the World Bank has been investing heavily in coal-fired power production. From World Bank Invests Record Sums in Coal, via The Ecologist.


Rebounding Into Coal

The financial crisis period of the past five years has served to highlight the new and constant restraint that oil prices place on the world economy. What’s over now is the fast growth made possible by cheap, liquid BTU (oil). But this is precisely why the economies of the non-OECD continue to increase their coal consumption, and why the world economy -- when it advances -- rebounds into coal.

There are enough BTUs from natural gas and coal to fund global economic growth for years to come. If natural gas from North America was exportable right now, then world prices for Liquefied Natural Gas (LNG) would be much lower than the $14-$18 level seen from Europe to Asia. Instead, North American natural gas remains landlocked and will remain so until export facilities are completed. This makes for a highly irregular pricing landscape in natural gas, in which Americans pay $2.50 for a million BTUs of natural gas, while heavy importers like Japan can pay as much as $17.00 per million BTUs. Accordingly, it is coal and not natural gas that provides the converged pricing to the world market. And with thermal coal trading around $2.50 - $3.50 per million BTUs, the continuing transition to coal is unstoppable.

In Part II: Coal is the Fuel for a World in Decline, we explain that a series of ongoing financial crises only accelerates the transition to coal as the obvious energy source in a time a declining wealth. As the world gets poorer, with higher-income OECD economies set to converge with lower-income non-OECD economies, coal remains the cheapest form of globally traded BTUs, adding low-cost power to economies under pressure. Finally, using the just released data from the BP Statistical Review, we update the latest forecasts on the future crossover point, when coal regains its number one position from oil and once again becomes the primary energy source of the world.

Click here to read Part II of this report (free executive summary; paid enrollment required for full access).

This is a companion discussion topic for the original entry at

I actually just submitted an article to the Daily Digest about coal's impact on health costs.  (Did not see this article out yet, honest!)  Sorry if this is old news to everyone, I did not recall seeing this yet. 

"We all knew coal is harmful — we figured people just ignored that harm because of their profit margins. But according to the prestigious American Economic Review, harm from coal-fired electrical plants costs more than twice as much as the electricity they generate. All told, coal plants cause $53 billion in damage every year. And none of that even takes climate impacts into account.
Health effects from coal-fired plants — increased deaths from sulfur dioxide, nitrogen oxides, and particulates — comprise more than a quarter of pollution-related damages from U.S. industry. That's a conservative estimate, done by centrist economists, that leaves out the health effects of climate change altogether. But probably more important is the conclusion that coal plants are a cost-benefit nightmare.
   [actual research article can be found here: ]  


Glancing though the research article, just skimed it.  I didn't see anything indicating they analyzed the impacts of lack of electricity as a harmful effect?  It's all well and good to point out that burning coal produces some harmful effects but unless you compare it to the other alternatives, less electricity and the impact that has (crime due to less lighting, less cooling/heating, etc).  How do you know if the tradeoff is worth it?

It's quite possible that not burning coal would be more harmful?  Every power generation techology  including solar/wind have impacts and side effects.


I am all set to go to the ICCF17 conference in Daejeon, Korea. There will be demonstrations of Cold Fusion. I will tell you what I see with my eyeball.
There is an impressive lineup of attendees. No Australians.

I loath and detest coal. Very bad safety record. Nasty lifestyle. Something about the climate catastrophe.

Arthur,I will be most interested to read your direct observations of cold fusion.  I definitely have one eye on the technology as a potential disruptor.  Haven't seen anything truly convincing yet that it is anything more than a minor laboratory curiosity, but there's enough there to capture my attention.

Unless and until an operating reactor is monitored by an independent, knowledgeable third party, with all inflows and outflows of electricity, Hydrogen, and heat isolated and measured with calibrated equipment, how would you really know what you are looking at?  

[quote=Jim H]Unless and until an operating reactor is monitored by an independent, knowledgeable third party, with all inflows and outflows of electricity, Hydrogen, and heat isolated and measured with calibrated equipment, how would you really know what you are looking at?  
You won't.
I have not yet spent a lot of time looking at the, say, Rossi device because all of the observed 'tests' were not done independently.  
However, I have seen a few presentations by professors at major US universities that have enough peer reviewed data to suggest that there might be something there.  
But until everything is done according the very highest standards of measurement and verification I remain in curious-skeptical mode.

I used to work in the utilities industry in Kentucky and was just back for a visit connecting with friends, including those still in the industry. Current and upcoming federal regulations are causing causing coal plants to be canceled and existing plants to be shut down, coal will not be used as a fuel of any type (in the U.S.only) as the current administration continues to implement its regulations utility prices will “necessarily skyrocket”.
See for more info.

Arthur, I'm delighted to hear we will have your eyeball on the job at the International Conference on Cold Fusion, whether or not this technology will be part of our future.  
I've been reading John Michael Greer's very enjoyable "The Wealth of Nature:  Economics as if Survival Mattered" and am struck by his explanation of diffuse versus concentrated energy sources (ie, the Sun's energy versus fossil fuel energy) in his chapter "The Price of Energy".  There's a re-thinking challenge there at least for me.  Apparently, sci-fi themes aside, the extremely concentrated energy forms that have been the norm for my entire life are NOT lying around all over the universe waiting for us to use them.  Further, attempts to transform diffuse energy into concentrated fail both in terms of money and EROEI.  So (pg 143):

"What this means, ultimately, is that the change from today's industrial economy to the economies of the future can't be accomplished by plugging in some other energy source to replace petroleum or other fossil fuels.  Nor can it be done by downscaling existing technologies to fit a sparser energy budget.  it requires reconceiving our entire approach to technology, starting with the paired recognitions that the very modest supply of concentrated energy sources we can expect to have after the end of the fossil fuel age will have to be reserved for those tasks that still need to be done and can't be done with any more diffuse source, and that anything that can be done with diffuse energy needs to be done with diffuse energy if it's going to be done at all."

Shorthand, from his June 6 blog entry at  "Collapse Now and Avoid the Rush".  I want the T-shirt.  Meanwhile, it surely is sweet to sit here in front of my magic machine listening to superb electronica from the other side of the world and learning from fine minds around the globe.  Concentrated energy has some nice features…  How I will miss it!

Where all this fits in with cold fusion remains to be seen.  Have yourself a fine time at the conference and please do fill us in when you get back.


PS Love your quirky, pointy posts!





Climate change will put an end to all this nonsense about coal becoming the fuel of the future. When the public catches on to the way their politicians have deceived them, they are going to demand proper action. Part of which will be ditching coal as a fuel. Many think that climate change is something for future generations to worry about. Think on! While we cannot say with certainty that any particular extreme weather event is due to climate change, we can say with confidence that the increased frequency of such events is exactly in line with what the models say should happen. Furthermore, we can also say with confidence that it is going to get worse, a lot worse, before it gets better. Old Mother Nature’s laws are immutable, no matter how much some politicians and TV ‘personalities’ might think otherwise.
There has been a hiatus in air temperature rise over the last few years. That does not mean that the warming has stopped. Just look at the temperature rise in the oceans, if you do not believe me. The heat has been going into the them because we have had a series of La Niña events. This site should be advising its followers to be prepared for the next El Niño, which is a lot more important than ‘backyard chickens’ etc. If the next El Niño is anything like as big as the 1998 one, heaven help us.

If you really want a means of energy supply for the future, then surely thorium reactors are top of the list. Go to TED talks and search for Kirk Sorensen if you would like to know more. It is a pity that it looks like China is going to beat the west into developing them and I guess we will have to go cap in hand if we don’t soon get on with developing them here. It is difficult to believe that they were proven in the U.S.A. over fifty years ago and only dropped because they cannot be used to make nuclear weapons, which were needed for the Cold War. Today that is surely a big plus.

For anyone who suspects that the politicians could possibly be wrong (think Sarah Palin and her kind) about climate change and the scientists who spend their lives investigating the issue could be right, go to and read up on the matter. Do it for your children and grandchildren, if not for yourself.






No chance…

It doesn't matter if everyone suddenly said okay fine, man made global warming is real, people are not going to give up their TVs, Ipads, Air conditioning, …  all those nice things that all use tons of electricity.   And with no alternative (at least not reasonably close), the coal plants are with us for a until the coal runs out.  Even if the OECD countries weren't completely broke and could actually build replacement generation, all the developing countries aren't about to give up on their development either.

As far as Thorium, while its a technology that might be developed it's never been and never will be the panacea all the advocates make it out to be.  There are a lot of technical challenges to it (as with any non-trivial technology), and it would take a huge amount of investment… but we are broke…



If we are to continue this civilization experiment that I depend apon for my survival, then we will need a concentrated form of energy.
The most concentrated form that we have is nuclear. But Fukashima should have convinced sane people that fission has it's drawbacks.

The only source of fusion energy we can see is the sun. This has led people to the illogical conclusion that hot fusion is the only fusion that can take place.

My choice for the three most likely candidates for a fusion are Focused Beam Fusion, Muon fusion and Cold fusion. Scanning the experimental results of Cold Fusion leads me to believe that there are a family of explanations for a range of phenomena.

Notwithstanding the long rollout time, if all of these avenues are duds then our future is set in concrete. Hence the trip to Daejeong. I have a lot of reading to do.

I note that Shanghai's 2010 population in Credit Suisse's "Cities in emerging economies" chart above is at odds - materially - with the official 2010 census for Shanghai's urban count by China's own National Bureau of Statistics (16.6m vs 20.6m).

Unless we're saying that China's maths differs from everyone else's then I'm thinking that if the start point for the subsequent population forecasts, assumptions, and conclusions isn't correct then what else have the chartists and bloggists got wrong?

rhare wrote:It doesn't matter if everyone suddenly said okay fine, man made global warming is real, people are not going to give up their TVs, Ipads, Air conditioning, … all those nice things that all use tons of electricity. And with no alternative (at least not reasonably close), the coal plants are with us for a until the coal runs out. Even if the OECD countries weren't completely broke and could actually build replacement generation, all the developing countries aren't about to give up on their development either.
Yeah, you're right, screw our chlldren and grandchildren, our toys are more important. And Americans wonder why they are so despised!
rhare also wrote:
As far as Thorium, while its a technology that might be developed it's never been and never will be the panacea all the advocates make it out to be. There are a lot of technical challenges to it (as with any non-trivial technology),
Strange how those working on it think otherwise. Climate change shows just how far vested interests are prepared to go (even to the extent of jeopardising the well-being of their own offspring) in defending their shareholders. The current nuclear industry has a lot to lose if thorium were to be adopted, so we should beware of just how far it too will go to protect its own shareholders. As for not affording to develop thorium reactors, the question is: can America afford not to develop them? They are, among other things, fail-safe. There may well come a time when the general public demand that as a pre-requisite for even using any form of nuclear reactors (many already feel strongly that way). In that circumstance it will be bye-bye the uranium fueled dinosaurs that the world is currently stuck with. Another 3 Mile Island and suddenly America is in deep doo-dah (I mean much deeper than the doo-dah it is currently in).
I would have more respect for rhare's views if they were to cite sources for information on which they are based.

Fusion has been thirty years away for as long as I can remember and by the look of things will remain thirty years away well past any point in time that it might come even close to actually working, let alone come remotely close to sufficiently widespread application that would have any significant value to society.As far as the comment that fission has its drawbacks, well true, uranium fueled fission reactors have a well-deserved reputation for being dangerous, as one would expect from a fail-dangerous technology. Not all fission reactors, however, fall into that category. Try finding fault with the proven technology of thorium reactors, which are fail-safe and a good bit better in almost every comparable aspect of their application.

Good luck in Korea, I hope they have something to show the World that is ready for Prime Time and not just a request for more funding for ever more R & D…Germany will be bringing some of their "NEW" state of the art coal fired generators on line very soon and I'm looking forward to seeing their numbers, hopefully they will be orders of magnitude cleaner than US coal fired generators.  We need coal to "fillin" untill we can get rid of nuclear reactors because they are too RISKY because no Country can afford a Trillion Dollar Eco-Disaster like Fukushima and neither can the Planet…
With the price of Solar (of all flavors) dropping monthly and the cost of Nuclear Reactors (R&D, construction , repairs and decommissioning) spiraling ever upward by the time many of these reactors get finished the energy will have to be subsidized by their Government!
China better start doing some future cost analysis or they will be digging a nuclear "hole" for themselves at the very time other major Countries are shifting to Solar (of all flavors) as the modern safe Energy Alternative, like Germany is doing!
If the Chinese, Indians, Russians, Japanese, Europe, US and Koreans wanted to become true World Leaders, they would Champion Solar from Space Together and then lead the World toward a safe new future; these books explain how:
The High Frontier by Gerard K. O'Neill,
Colonies In Space by A. Heppenheim­er.
The Third Industrial Revolution by G. Harry Stine
The Space Enterprise by Philip Robert Harris
Mining the Sky by John S. Lewis

Until someone constructs a working demostration "plant" and allows others to monitor it, I believe this is just more advanced funding advertising/requests for "partners"…If by some chance S. Korea has pulled the rabbit out of the hat, I'll be the first to salute them when it is built and working 24/7/365…

 Don't believe the spin on THORIUM being a greener nuclear option:
Solar (of all flavors):
… Is faster to install,
… Costs less to install
… Is ready for 24/7 power
… Requires no decommissioning costs
… And has no Nuclear RISK…


Yes coal has problems but it is important to remember tht coal is not a scary as Nuclear which can such enormous RISKs associated with it that it is no longer acceptable when their is any alternative energy source )pun intended).  The nuclear industry is very powerful, so there has been little credable reporting on what has up until this point been mostly Nuclear Baloney* foisted upon both the Japanese and all those now breathing Fukushima radioactive pollution GLOBALLY…
LEFT UNSAID, is why anyone should accept any amounts of radioactive pollution from any reactor World-Wide. If radioactive pollution from say Iran or North Korea covered the USA and Europe like Fukushima’s radioactivity is now doing, the USA and or NATO would be considering bombing them or at lease rattling sabers; yet because it is Japan, the Nuclear Fascists** just put on a happy face and lobby for ever more nuclear reactors.
Thanks to the web and blogs like this one, many have taken up the call to report on what is really happening not just in Japan but in every Country that is plagued by leaking and or aged reactors. No more are people willing to accept the myth of 100% safety since Fukushima proved beyond a doubt that Nature can destroy any land based nuclear reactor, any place anytime 24/7/365! That realization plus the RISK of a Trillion Dollar Eco-Disaster like Fukushima have made even previous supporters of nuclear energy rethink future Energy plans. With the cost of Solar (of all flavors) dropping almost monthly and the cost of nuclear spiraling ever upward, shifting to renewables has never been more practical unless you are receiving some form of Nuclear Payback***.
Those that support nuclear power because nuclear power somehow supports them; no matter what the health implications or other “costs” are for others.

Try Googling Thorium and then realize that the thorium tech is futureristic at best… 
Remember upscaling a tiny lab model into a workng power plant is difficult and costly at best.